Trade openness and nonlinearities in Brazilian monetary policy
DOI:
https://doi.org/10.11606/1980-5330/ea188704Keywords:
monetary policy, interest rate, Taylor's rule, trade opennessAbstract
This paper investigates the existence of asymmetries in monetary policy in Brazil, considering distinct levels of trade openness. To this end, monthly information between 2003 and 2020 and a non-linear Taylor rule with threshold effect and endogenous regressors were used. The results show that in the higher trade openness regime, the response to deviations of inflation expectations from its target is statistically null. In addition, there is a smoothing process in the conduct of Brazilian monetary policy and a response to the output gap in both regimes, with greater response in the lower openness trade regime.
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